Mobile comms equipment poised for double-digit growth

SAN FRANCISCO—The market for mobile communications equipment—including smartphones and tablets as well as infrastructure gear—is set to grow by 13 percent this year, in spite of soft macroeconomic conditions, according to market research firm IHS iSuppli.

Total factory revenue from OEMs making mobile communications equipment is projected to reach $376 billion by year-end, up from $334 billion in 2011, according to a new IHS report on the wireless systems market. The firm attributes the projected growth to increasing shipments of mobile handsets and tablets, particularly devices supporting the 4G long term evolution (LTE) wireless standard.

In 2013, IHS projects the market for mobile communications equipment will rise again to $444 billion.

“The wireless equipment market is continuing to grow this year despite facing daunting economic headwinds, including the slowdown in China and the turmoil engulfing the euro zone,” said Francis Sideco, senior principal analyst for wireless communications at IHS, in a statement.

Sideco noted that the 13 percent projected growth this year will be significantly lower than the 29 percent growth the mobile communications equipment market enjoyed in 2011. But he said the double-digit increase expected this year is a testament to the ongoing appeal of cellphones and tablets to global consumers.

"The increasing deployment of LTE is also a considerable factor, which will continue to spur the market,” Sideco said.

IHS defines mobile communications equipment factory revenue as what manufacturers earn from the sale of devices into the channel—including smartphones and other handsets as well as wireless infrastructure gear such as routers.

IHS said the fact that smartphones are becoming a larger segment of the handset market bodes well for semiconductor vendors. Smartphones require more semiconductor content, including more expensive applications processors, memory bits and sensors. Smartphone support for the next-generation LTE wireless standard also drives increased semiconductor buying because more capable digital basebands, RF transceivers and power amplifiers are required, IHS said.

As a result, IHS said it expects the semiconductor market for mobile communications to generate $74 billion in 2012, up 5 percent from $71 billion in 2011. While wireless semiconductor revenue has been revised down slightly from earlier estimates due to the underperforming global economy, the wireless segment as a whole remains one of the few areas in the worldwide electronics value chain expected to keep growing, IHS said. Related stories: